Posted
by
CmdrTacoon Thursday October 21, 2010 @12:56PM
from the just-not-good dept.

bonch writes "Google only pays a 2.4% tax rate using money-funneling techniques known as the 'Double Irish' and the 'Dutch Sandwich,' even though the US corporate income tax is 35%. By using Irish loopholes, money is transferred legally between subsidiaries and ends up in island sanctuaries that have no income tax, giving Google the lowest tax rate amongst its technology peers. Facebook is planning to use the same strategy."

The widespread use of loopholes by companies/"rich" people always really pissed me off. They constantly complain so much of their wealth is being taken, yet they pull crap like this.

I would bet you that if my wife and I tried to do something similar, we would almost certainly be "caught". I don't know if loopholes are due to the complexity of the system, or because the big guys can afford to pay folks who know how to exploit them...but regardless of the reason, it's fucked up.

All of this depends on your definition of "poor". According to some, if you make $50000 per year you are poor. According to others any household making under $100000 is poor. Then there are those that look at either number and classify people making that much to be rich.

Because it seems every time there are tax cuts, they somehow benefit the people (or corporations) making the largest amounts of money the most. See "trickle down economics" or "voodoo economics". The middle class pay the greatest percentage of their income to taxes. The ultra-rich generally pay very little, unless they are honest.

Because it seems every time there are tax cuts, they somehow benefit the people (or corporations) making the largest amounts of money the most.

Because those are the people paying the most in taxes to start with. If you look at the numbers, the vast majority of taxes are paid by the vast minority of the people.

It is impossible to enact a tax cut for people who already pay no taxes, and that's nearly 50% of the people in the US already.

Your statement is a tautology. A 5% across the board tax cut will save 50% of the people -- the poor -- nothing at all, while it will save those who pay a lot of taxes a lot. And those in the middle save in the middle.

Suppose that every day, ten men go out for beer and the bill for all ten comes to $100
If they paid their bill the way we pay our taxes, it would go something like this

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7..
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that’s what they decided to do..

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20”. Drinks for the ten men would now cost just $80.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men? The paying customers? How could they divide the $20 windfall so that everyone would get his fair share?

They realised that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.

So, the bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.
And so the fifth man, like the first four, now paid nothing (100% saving).
The sixth now paid $2 instead of $3 (33% saving).
The seventh now paid $5 instead of $7 (28% saving).
The eighth now paid $9 instead of $12 (25% saving).
The ninth now paid $14 instead of $18 (22% saving).
The tenth now paid $49 instead of $59 (16% saving).

Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.

“I only got a dollar out of the $20 saving,” declared the sixth man. He pointed to the tenth man,“but he got $10!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a dollar too. It’s unfair that he got ten times more benefit than me!”
“That’s true!” shouted the seventh man. “Why should he get $10 back, when I got only $2? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”
The nine men surrounded the tenth and beat him up.

The next night the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

And that, boys and girls, journalists and government ministers, is how our tax system works. The people who already pay the highest taxes will naturally get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas, where the atmosphere is somewhat friendlier.

Actually, a fair number of people get net income from the IRS because they get "refundable tax credits" and the Earned Income Tax Credit. Most tax credits either reduce your taxable income or reduce the amount of tax levied, but in any case, you can never end up with anything less than $0 on the "tax owed" line, so you simply get all of your withheld money back. Refundable credits and the earned income tax credit actually let you end up with a negative figure for "tax owed" so you get a refund in excess of what was withheld from your paychecks- in other words, net income from the IRS.

Them leaving is actually completely fine, albeit completely unrealistic. Rich people don't "create jobs". It's demand from a strong middle class that wants to buy new products, accessories, techno gadgets, etc. that creates the incentive for startups and companies to research and develop new products. Even if you face a 90% tax bracket, the idea of leaving money on the table is ridiculous. There will always be businesses to sell to people with money. Give the poor and middle class money, and they'll spend it. Give to a rich man, and he'll invest it overseas.

But by all means, continue ignoring the reality that our greatest period of growth was right after WW2 when we had 90% tax brackets. 30 more years of America losing jobs overseas, the rich getting ever richer, and millions more becoming homeless, while everyone complains that the rich are "punished", should leave you in a great situation I'm sure. I'm in the highest bracket so it won't hurt me, but I sure do feel bad for those who must suffer for your foolishness.

Rich people have been moving overseas for the last 30 years. If you give them more money, they will spend it overseas. If you want to make America's economy stronger, give it to those people who will spend it within the country: the poor and middle class. If the richest corporations take their business elsewhere, other businesses will spring up to take the place and sell it to the enormous market that a powerful US middle class will represent.

You forgot the part where everyone but the richest guy is working for a living, and the richest guy doesn't, since he gets a cut off of everyone else's work.

I hear this a lot. Can you back it up. And no Bill Gates and co don't count. These guys worked bloody hard and took big risks to get their respective companies started and keep them going. They didn't just sit around collecting everyone else's "tax".

I think its just jealously. You think you deserve to be "rich" more than the next fellow. Well you don't. Some are rich because they worked hard and got a little bit lucky, some are rich because they got lucky and some are rich cus daddy was lucky. But that makes them no less deserving of wealth than you.

Because it seems every time there are tax cuts, they somehow benefit the people (or corporations) making the largest amounts of money the most.

If you look at the absolute numbers -- that's true, because the people making the largest amount of money pay most of the taxes (the top 10% paid 55% of all federal taxes in 2007). However, if you look at it in percentage terms, the burden is disproportionately on higher incomes.

For example, if taxes go up as currently legislated in 2011, the federal government will get an additional $3,700 billion over the next 10 years. But, if they only let taxes go up for couples with incomes over $250,000/year (or singles over $200,000/year), the government will get $700 billion.

Consider what would happen if taxes were to remain as they are now (in 2010). The "rich" would get $700 billion more over the next 10 years, and everyone else would get $3,000 billion more. That means that the "rich" would get 19% of the total (700/3,700).

But, this definition of "rich" paid about 44.3% of all federal taxes in 2007 (and 61% of federal individual income taxes). So, they would be getting less than half of their "share", if that money were spread proportionally (according to all taxes paid).

FYI, I'm estimating that the 250K/200K cutoff separates the top 10% from the bottom 90%.

They may have paid 44.3/61% percent of the taxes, but THEY CONTROL OVER 90% OF THE WEALTH. The way I'm looking at it, I'm still getting screwed. They have 90% of the money, they should pay 90% of the taxes. Hell, I'd be satisfied to go back to the way it was under Reagan, when they paid 70%. But this 44% is bullshit.

According to the IRS last year, I made just over 90k last year (gross) and I was in the top 15% of income earners in the U.S. So the top 10% might be lower than you think.

The CBO documents their methodology in the URL that I cited earlier. They include some sources of income that the IRS may not include.

For 2007, the minimum adjusted income for the top 10% was $102,900 for a single person household. To calculate the number for multiple persons, multiply that number by the square root of the number of people in the household.

So, it's not likely that the CBO's methodology and the IRS's methodology line up exactly. But, I think the top 10% is close enough to the $250,000 threshold for couples with two children.

1) I get paid, they take taxes.2) I buy something like a house, I pay sales tax.3) Then continuing to own that house, I pay a % of value on that house as a tax every year.3.5) if I sell the house, and make a net profit over what I paid, I pay a tax on that profit as income"4) if it's a valuable house/property, if I will it to my children on my death, they get hit with a massive estate tax.

It's a great system....if you're a government.

I sell my hammer to my neighbor, according to the government I should be paying taxes on that transaction. Why, again, are they entitled to that?

In response to your FYI, the top 5% is earners over $157K, and above 250K is a meager 1.57%. Thus that $700B will be distributed over a mere 1,699 households over the next 10 years.

These numbers have to be wrong, because I can guarantee you there are at least 2000 homes over 250K just because of sports (MLB has 1200 players with a minimum salary of $400K, NFL has 1280 players with a minimum of over $300K).

I also know that my home makes over $250K/year, and we're in the "poor" neighborhood in our county. There are hundreds of homes that make than we do, just in our county.

In response to your FYI, the top 5% is earners over $157K, and above 250K is a meager 1.57%. Thus that $700B will be distributed over a mere 1,699 households over the next 10 years.

Since I don't know how your citation's methodology compares to the methodology used by the CBO, I'll instead cite the CBO's table in the same URL that I provided earlier.

The first table on page 7 says there were 11.9 million households in the top 10% in 2007. There 5.9 million households in the top 5%, and 1.2 million households in the top 1%.

The last table on page 9 lists the minimum adjusted income for the various categories. For the top 10%, it was $102,900 for a single person household. The methodology is on the last page: multiply the number in the table by the square root of the number of family members. For married without kids, multiply by 1.414 = $144,500. For married with 2 kids, multiply by 2 = $205800.

It's not exactly $250,000 for a married couple, but I thought it was close enough for a rough estimate.

However, I think you might want to read your own citation a bit more closely. It's not 1,699 households. It's 1,699 THOUSAND households.

, who do you think will provide investments that create jobs if you tax the rich at 90%? Government?

The same kinds of people who created them from 1954 to 1980 when the top tax brackets was 91%.

Your entire argument fails when I point at the 1954 tax code, signed into law by Eisenhower. There were still rich people. There was still investment. There was still job creation. There was still opposition to the government.

You're crazier than Glen Beck if you actually think a 90% tax bracket would have any of the consequences you're hinting at.

It sure is convenient to forget the existence of sales taxes, state income taxes, and the various payroll taxes that everyone collecting a paycheck pays. Poor people actually pay quite a bit in taxes, and it tends to hit them a lot harder.

As the article itself points out, poor people still pay Social security, Medicare, state taxes, and consumption taxes. These represent a far bigger proportion of a poor person's income than a rich person's income.

In addition, the article is about the 2009 tax year. During the 2009 tax year, Obama's Making Work Pay tax credit disproportionately benefited the poor. That tax credit is now expired, and (unlike with the Bush tax cuts) there is absolutely zero discussion in Washington about extending it.

Anyone who supports extending the Bush tax cuts but fails to support extending the Making Work Pay tax cut is doing exactly what we are accusing you of doing, namely, wanting to keep poor people as the only ones who pay taxes. Presumably this is your stance as well, since I see you favor extending the Bush tax cuts, but not the Making Work Pay tax cut. If this assessment of your position is wrong, please feel free to correct it.

Not true. The poor spend everything they make, many living paycheck to paycheck. They pay consumption taxes on almost everything they make so at a minimum they pay 10% of their earnings in taxes. Way more than the typical rich person that saves the majority of their earnings and then cheats the system with tax loopholes.

The tea party is a name for the majority of americans who oppose the wasting of over 3 trillion dollars now by our government. It's not an organized group. There is no leadership. People in the tea party are just as angry at Republicans as they are Democrats, just the Dems more so since they are the ones responsible for the stimulus wastes.

Puh-lease. The tea party is the name for a group of people who have been led by the nose by millions and millions of dollars poured into "grassroots" network efforts by the extremely wealthy people who stand to benefit most from the anti-regulatory, anti-tax policies the tea party supports.

Please explain why you support the government wasting over 3 trillion dollars of borrowed Chinese money, and then please explain why people opposed to that make you so angry.

No need, as I don't believe the money is wholly wasted. What makes me angry is the 4-7 trillion dollars we've spent and have accrued liability for with pointless boondoggles in Iraq and Afghanistan, and the people who blindly support those "wars". But that's beside the point.

The simple fact of the matter is that spending and tax reduction during economic downturn has been shown to be ineffective at best (the Hoover presidency shows how bad it can be). If you cut spending on programs that have domestic impact, you end up *further reducing* government revenue due to contraction... which makes the deficit even worse. Stimulus spending is an investment. Properly done ( national infrastructure, aid to local and state governments), stimulus spending, even if financed by debt, is the right course of action.

People who advocate government austerity in the face of a deep recession are asking for the recession to deepen, and for the deficit to get worse.

It remains to be seen what will happen after the next election, but the idea that Republicans are responsible for deficits and debt ignores the fact that it was a Republican congress that balanced the budget in the first place and that it was a Republican president ("Read my hips") that signed off on the tax increases that made it possible.

Notice that I made no mention of political parties or individual politicians other than Hoover. I don't think Democrats or Republicans can fix the current economic problem -- but I'm damn well sure the tea party platform can't.

Your accounting for the Iraq and Afghanistan wars is way off. Maybe you should spend some time outside of the echo chamber.

Or, you know, you could bother to get educated about the subject. Stiglitz & Bilmes estimated the cost (originally) at 3-5 trillion; Stiglitz has revised the cost to 4-7 trillion based upon their original underestimation of the number and cost of disabled veterans returning to the US, among other things.

If you haven't read any of Stiglitz's work on the subject, or any of the papers published in their wake, maybe *you* need to spend some time outside the echo chamber.

Since we only really have the choice between two evils, I choose the Democrats.

Even if you don't agree with teabaggers you should support their activities. We need a multi-party system now.

I disagree. The tea party is an astroturf for the very wealthy, they are people being led to advocate for policies that aid the extremely wealthy. They have also aligned tightly with the Republican party, which means that any usefulness in re: 3rd parties is gone.

While I agree it would be better to have a multi-party system, they are not the kind of party I could support. Furthermore, given our current political system, we will not ever have a viable third party. So the best option is to throw your lot in with the party that better represents your views, and then work to make that party more closely aligned with your views.

@Red F. - Move to Europe you Socialist. Big Government is the most inefficient way to distribute resources or run anything. Especially, something as large as an economy.

No, corporate mon/oligopoly is the most inefficient way to distribute resources or run anything. And that's the alternative to big government.

Reducing the tax rate has been proven time and time again to create a major upturn in the economy.

No, this is not true. Reducing the tax rate has been proven time and time again to have a positive effect on the economy when coupled with deficit spending. Reducing the tax rate AND government expenditures has been shown time and time again to further depress the economy.

Then again, your world view is so warped at this point that you believe that million of individuals joining a movement for Limited Government is actually sponsored by wealthy people. If you'll buy that line instead of knowing that the majority of Tea Party funds come from individual non-wealthy members

Who pays the organizers of the events? Who paid to train those organizers? Who paid for the advocacy institutes that the "educated" tea partiers use to justify their beliefs?

You just don't want to believe that you've been had. Well, you have been had. You're dancing to the tune of millionaires and billionaires who are laughing their way to the bank as they are seeing limitations to their amassing of wealth disappear.

You know what the saddest thing is? That you don't even realize that the policies you advocate are detrimental to YOU.

There are plenty of possible other alternatives. The most obvious one is an actual free market

Oh, I agree on that one, emphatically. But in order to have an actual operating free market that would lead to a good outcome, we'd need regulation of the market to ensure the actors in the market can act freely with the real values of their choices explicit to them.

So we'd need:

1. Regulations to enforce internalization of externialities like pollution, social costs, etc.2. Regulation to ensure equal access to capital to remove that particular barrier to entry3. Regulation to ensure adequate disclosure of information so that actors in the market could make efficient choices4. Regulation to ensure that markets do not get captured by a monopoly or oligopoly5. Regulation to ensure that not only a subset of corporations can take advantage government functions in other areas (like the military, which is a necessary function of government)
6. Regulation and oversight to ensure there is no regulatory capture of items 1-4 above

In short, we'd end up with a system much like today's, if only we could get rid of regulatory capture.

No corporations at all.

Yes and no. People should be free to join together to mitigate risk, amass capital for large investments, etc. This is what a corporation was originally for. What I'd like to see is corporations not sheltering investors from non-financial risk. We'd see a lot less bad activity from corporations if the owners were personally liable for the evil sometimes done in the name of profit.

your first citation: where have you been? It's all over the fucking place. JFGI.

However, we DO know that Media Matters Inc. IS funded by a single man with an angenda to control the world cash flows, known as George Soros who recently directly donated a million with a specific agenda [CITATION [indyposted.com]].

So? It makes it worse that he's open about it, instead of doing it in secrecy like the Kochs? And Media Matters is NOTHING like the tea party.

[CITATION NEEDED]. The Iraq and Afghanistan wars under the Bush administration cost around $200 billion, but the Obama administration recently granted $390 billion for the same wars (NOT including the stimulus and health care bills) [CITATION [wikipedia.org]].

Oh, you fucking tool. $200 billion under Bush? That figure was an estimate in 2003, and it was *laughed at* because everyone knew it was extremely lowball. Here's the first citation... written by a Nobel prize-winning economist: Three-Trillion-Dollar-War-Conflict [amazon.com] wherein the estimated total cost is 3-5 Trillion... and Stiglitz has subsequently published that they underestimated some of the costs, especially the cost of caring for the disabled vets returning home (to the tune of an additional 400 billion), and that the revised estimate is 4-7 Trillion dollars.

If there is anyone misinformed here, it is you. Because you disregard costs other than budgetary, which any economist knows is invalid.

Hate to break it to you but the tea party formed way before any politician or media outlet even knew what it was

But not before people of extreme wealth were funding groups intended to spark something like the tea party. These are the elites who instigated and control (inasmuch as there is control) the tea party.

You're deluded if you think the tea party is pure grassroots. It's not. And if you consider yourself a tea partier, please ask yourself why people like the Kochs are willing to spend millions astroturfing a group you consider yourself a member of.

And as for the banning of Republican speakers... did that ont serve its intended purpose? Making the Republican party go hard right economically, to the eventual benefit of people like the Kochs?

I'm curious how you explain the sequence of events. A bunch of libertarians find each other and discover they enjoy each others' company, so they decide to start hosting tea parties, protesting George Bush's policies.

Some Conservative Republican notices, decides it's a great idea, they jump on the bandwagon. It gets noticed and starts getting media attention sometime around the election. Apparently, somewhere in the same time frame, Koch eagerly leaps in and starts throwing around money to his leaders to brainwash his minions to...be more right wing conservative?

There's a lot that's fishy about the whole story. But blaming Koch just doesn't add up. Unless the family's secretly been closet Republicans the entire time they've been pretending to be Libertarian? Do you think David's vice-presidential candidacy in 1980 was a clever plot to infiltrate the party and subvert them with Conservative ideas from within?

That's the Congressional Budget Office's compilation of effective tax rates and percentage of taxes paid by the various income quintiles in the US from 1979 to 2007. They also provide numbers for the top 10%, top 5%, and top 1%.

The effective individual income tax rates for the lowest 40% has been negative since 2002, as the methodology includes low-income tax credits. However, once you add in the other types of federal taxes, it's no longer negative, but the lowest quintile's share of total federal taxes was less than 1% in 2007.

In contrast, the top 10% of taxpayers paid 55% of total federal taxes in 2007. The lower 90% of taxpayers paid the other 45%.

the top 10% of taxpayers paid 55% of total federal taxes in 2007. The lower 90% of taxpayers paid the other 45%.

In 2007, the top 10% of the population owned [ucsc.edu] 73% of total assets and 83% of financial wealth in the US. If they're only paying 55% of the total taxes than the adage that "only the poor pay taxes" does in fact ring true.

The average person starts off with a base non federal (mostly state) tax rate of over 10%. That ignores state income tax- its just school tax, gas tax, cigarette tax, phone tax, car license tax, toll road fees.

That tax rate is fixed (if you have a cell phone, your taxes are about $30 regardless of if you are rich or poor).

That means the effective tax rate on the wealthy is.03% for the same taxes.

After that you have social security tax. 7.5% on people making up to about $100k. (but a "hidden additional 7.5% you don't see). Not paid by the wealthy again.

This means people making $50k to $100k pay a higher portion of their income in taxes than people making much more. Federal income tax is just a red herring. but even there, the wealthy can structure their "income" as "dividends" and other tax advantaged income and pay a much lower rate on their income than everyone else.

It's broken. The top.5% are getting about 20% of the income and have about 40% of the wealth. They should be paying about 20% of the income taxes and 40% of the property taxes.

When you include the tiny amount for the bottom 20%, the wealthy should probably pay a little bit higher taxes than that too. They don't.

Just so you know, a tax rebate is simply when tax paid is greater than tax owed. Most tax filers who get rebates are getting back some fraction of the money that they already paid through withholding.

The income at which a family can manage to pay zero tax (that is, their rebate is equal in size to the total withheld) is roughly the same as the median income (which in turn is about twice the poverty level). About 36% of income tax filers paid zero or less tax, although of course there are many cases where you are not required to file income tax forms at all.

The real question you should be asking yourself is; why do we (and I mean everyone, rich and poor alike) need to pay so much to a government that simply wastes that money, for the most part.

But is that really true, the government wasting most of it? OK, no organization can be perfect. I accept that. But if there were no government spending on promoting the "general welfare", you might actually be less prosperous than you are now, despite your lower tax burden.

This may seem counterintuitive. Governments, at various levels, can provide roads and an educated populace, to name just a few of the more apparent benefits. These work to increase the value of the people's labors. When you can sell your widgets across the state, the nation and even the world, then you can potentially sell more widgets. When you can hire employees that already know how to read and you don't have to teach them, that's a direct benefit to your business.

But you don't have to believe me or even accept my explanation that taxes collected and spent reasonably actually increase prosperity. Look at data from the World Bank, or the CIA Factbook, or the WTO or wherever you like. Compare the GDP per capita of nations to their effective tax rate. Notice that once your tax rate gets outside the approx. 20-45% range your GDP per capita drops. (There are exceptions to this, of course. Countries with huge resources w.r.t. the size of the population do just fine at any tax rate -- Kuwait's a good example of a country with low tax rate due to their large oil wealth.)

Who gets back more money than they paid? Certainly, when I was young and poor, I got money back at the end of the year, but never more than I had paid in withholding. I see people make this claim all the time, that poor people get more money back than they pay in taxes, and I just want to know, uh, how do they do it?

No one I know vilifies the rich for being successful. In fact, people tend to idolize successful achievers. IF they deserve that success. People love it when smart, plucky, hard working go-getters make it big, but they hate it when conniving sociopathic weasels do. And quite frankly, for every one upstanding rich man who made it big without stepping on anyone along the way, there are ten selfish, amoral pricks who fucked anyone and anything that got in their way. It's not the bad apple that spoils the rich bunch, it is the one lone good apple that somehow resists the all encompassing rot.

Now look at the people who really make a difference, the scientists and engineers who actually make the world a better place. Despite the fact that there work is infinitely more important than that of so called 'industrial leaders' who are mere paper pushers adding nothing of benefit to human society, these scientists and engineers are almost never rich, unless they come from a rich family, or happen to be sociopathic enough to stab their friends in the back when the time comes.

Remember, if you are making a quarter of a million dollars nowadays, you are barely upper middle class. "Rich" doesn't start until you hit eight figures. I know a lot of middle class Americans think they might become rich someday. They won't.

Speaking of stupid memes (reference to your other post) what on Earth do you believe the relevancy of the percentage of total tax revenue to be?

6th grade math: if the tax rate on rich people goes down and the percentage of total income tax revenue from them goes up, what does that imply about the relative worth of all groups? The rich are getting richer. A LOT richer. Despite all this economic downturn I've heard so much about.

1st grade logic corollary: given that money is an imaginary metric with a constantly changing but constantly FINITE global quantity, the lower and middle classes are paying for it.

Raising the tax rate on the rich would not be starting a class war. It would be the bottom 90% finally getting around to fighting the class war that the rich started long ago. I know, I know, I'm a heretic, Reagan was the best president ever, and deregulation makes everything all better.

"... but I do begrudge people from demanding that the rich pay even more taxes.'

Warren Buffett himself says that the rich do NOT pay enough taxes, and that the taxes on the rich should be higher.

"Speaking at a $4,600-a-seat fundraiser in New York for Senator Hillary Clinton, Mr Buffett, who is worth an estimated $52 billion (£26 billion), said: “The 400 of us [here] pay a lower part of our income in taxes than our receptionists do, or our cleaning ladies, for that matter. If you’re in the luckiest 1 per cent of humanity, you owe it to the rest of humanity to think about the other 99 per cent.”

"Mr Buffett said that he was taxed at 17.7 per cent on the $46 million he made last year, without trying to avoid paying higher taxes, while his secretary, who earned $60,000, was taxed at 30 per cent."

I never felt very good about paying into a system that requires me to either be an expert in that system, which would mean spending the equivalent time to get at least a two year degree, just to pay my taxes, or hiring an expert to do them for me. If I am required under penalty of imprisonment to pay taxes, its galling to me that I must also hire an expert to do them for me. Its a ridiculous, and unsustainable, situation that needs to change.

Wich just goes to show how messed up our legal system is. If you can't learn all of criminal law (that applies to individuals not acting on behalf of someone else) in a one semester class in high school, it's merely a tool for oppression. If the government doesn't teach you those laws in the government-run (aka "public") high schools, WTF?

For the most part, it is very obvious what is illegal and what is not. Many of the complications are there to ensure that the punishment is just. You would not like a system that was teachable to high school students in a semester.

I can't speak for corporate income tax, but for personal income tax, the deal is this: you get a tax credit for taxes paid overseas. If you still owe US taxes after that, then you pay US taxes. If the foreign tax credit eliminates your US tax bill, then you don't pay any US income tax. The problem is that it effectively ensures that you get taxed at the highest rate applicable.

I am not a tax expert, however, I have heard that yes, you and your wife COULD do something similar, except the costs to get it going would greatly outweigh the benefits. Many of these tax "loopholes" have high fixed costs to get going, so they aren't useful for the kind of income most any household would have.

Its perfectly legal, and they paid all the required taxes in the country where it was earned. No laws were violated.

So what's your beef?

That was my entire point...it shouldn't be legal, and when a company does this, laws should have been violated.

Ok, lets take your (implied) assumption, that Google should pay taxes on its world wide earnings regardless of the country in which it was earned.

Ok? Sound reasonable so far?

Now, google has to follow the law in every country where they have an office and a corporate structure. So same rules apply to all those countries. Earnings in France, US, Japan, etc, all have to have taxes paid in Britain, and again in Norway, and again in China. Never mind that the money was earned in, and kept in the USA.

Has the flaw of your assumption dawned on you yet?

You earn a dollar in the US, and just because you have a post office box in Australia you have to pay their taxes too?

You drove thru another state on your summer vacation. Are you going to file income tax in that state? You used their facilities, roads, etc. How bout paying your fair share?

(and yes, rich people will still pay more in taxes. Even if they just put the money in the bank, it will be spent eventually.)

More in absolute terms, but proportionally much less. Sales taxes are regressive - they make poorer people pay a greater percentage of their income as tax. A poor person can't afford to save, they spend everything that they earn on essentials. A rich person has numerous investments and savings that would not be taxed - they spend a much smaller proportion of their income.

By taxing incomes, the government ensures that everyone, most definitely including the poor, pays taxes by catching you (often again) when you spend your money on anything that is taxed. The only way to avoid paying is to only buy things that themselves are not taxed in any way. And good luck with that.

The widespread use of loopholes by companies/"rich" people always really pissed me off. They constantly complain so much of their wealth is being taken, yet they pull crap like this.

I would bet you that if my wife and I tried to do something similar, we would almost certainly be "caught". I don't know if loopholes are due to the complexity of the system, or because the big guys can afford to pay folks who know how to exploit them...but regardless of the reason, it's fucked up.

This is why need to scrap the entire tax code and replace it a federal sales tax. This shifts the taxes not on what people make, but what they spend. Suddenly everyone would pay taxes including the rich, poor, illegal whoever. No one would be taxed for money saved or invested.

Of course, there would still be loopholes. Medicine, unprocessed food, children's clothes etc can be made tax exempt as to not tax what people need to survive. All other "loopholes" and complexities would disappear instantly. No more extraordinarily wealthy people claiming everything as a loss or business expense in order to avoid taxes on it. If it's purchased, it's taxed.

(and yes, rich people will still pay more in taxes. Even if they just put the money in the bank, it will be spent eventually.)

That is quite possibly one of the most stupid and naive things I've ever read. However, as a person whose household income is over $250k, I'd like to thank you for your efforts to make me wealthier. As you note, I'll put all that money I save in the bank, and then it will be spent eventually when I retire in Europe. Spent in Europe, that is. Resulting in 0 sales tax in the US. Cheers.

What these companies are doing is completely, perfectly, entirely legal. If you had the wherewithal, you could do it, too (assuming it made sense for your income level), and there would be no legal or financial repercussions. In short, the system is working as designed.

Why would I emulate an act that I hate? I realize that some tax dollars are wasted, but not all of them are. I like driving on paved roads. I like having a police and fire department. I like having a military. I like having all the services that a modern government could and can provide.

What I don't like are people cheating the system, making that government more expensive/more corrupt by not only breaking the system, but gloating about it and night encouraging the behavior.

Don't like it? Elect a government that isn't in bed with the corporations. *shrug*

The very nature of politics and business in this country prevents that from realistically happening.

Yeah, but that's just the thing - by what standard do you get to claim they're "cheating" the system, when they are following the rules that are written? I take a deduction for mortgage interest; is that "cheating" becasue it reduces what I pay, or is it just making use of the favorable (to me) provisions of the law? If it's the latter (and I fail to see how it could be otherwise), then how is what Google is doing any different?

If the IRS doesn't intend this to be legal, then they need to change the statutes and/or regulations; otherwise any money "lost" in this way is their fault.

At least to me, TFA's mention of the rather large budget gap faced by the U.S. backfired. I suppose it was meant to say "why are they avoiding making payments that are so badly needed", but what it really conveys is "this is a meaningless drop in the bucket compared to the overall problem, and the government needs to focus on the real issues that have it so short-funded". I mean really, if you subtract 60B from 1.4T, do you know what you get? You get 1.4T.

Now, here's some facts: we've been doing this "progressive taxation" thing for quite a while now, at least a few generations or so. Yet the gap between the rich and the poor in the USA has only increased.

Wow, talk about a load of bullshit. Plenty of other nations have far *more* progressive tax codes, and have a much smaller income gap. But clearly, because you're an insane libertarian, the problem is those damned progressives...

But, hey, don't let reality get in the way of your hilariously misguided ideology.

PS. If you hadn't noticed, the tax code in the last 20 or so years, during which the income gap has grown the fastest, became far *less* progressive than it's ever been.

It should also be noted that the official position of the government and the IRS is that tax avoidance, which this is, if done legally, which this is, is perfectly fine. It is not Google's fault that the tax code is so screwed up that they can avoid paying 90% of what, on the surface, appears to be their tax liability. Now, if Google had an army of lobbyists in Washington pushing to extend those loopholes or create more of them, that would be evil.

Now, if Google had an army of lobbyists in Washington pushing to extend those loopholes or create more of them, that would be evil.

How about secret agreements with the IRS? From the article:

"After three years of negotiations, Google received approval from the IRS in 2006 for its transfer pricing arrangement, according to filings with the Securities and Exchange Commission.

The IRS gave its consent in a secret pact known as an advanced pricing agreement. Google wouldn't discuss the price set under the arrangement, which licensed the rights to its search and advertising technology and other intangible property for Europe, the Middle East and Africa to a unit called Google Ireland Holdings, according to a person familiar with the matter."

You need to look up what ethics means. Ethics means responsibility to all *stakeholders*, not just the shareholders. Stakeholders in a company include the shareholders, employees, and the society in which they operate. A company that does whatever it can to maximize shareholder value without regard to any of the other stakeholders is not ethical.

For the record, I tried to submit a different headline, but the buggy, AJAX-ridden story editor wouldn't display the changes I made in the text boxes when I hit Preview. It kept displaying the old text unchanged. I even refreshed the page and tried a different browser. Eventually, I said, "Fuck it" and submitted, hoping it would post the changes.

Who's "they"? And, assuming you're referring to google, how are they shafting you?It's not your money.

I disagree. The taxes they are avoiding paying would be used to pay for infrastructure, services, etc, so, in a very real way, it *is* his money because without those taxes, the system is not as well funded and projects/services/infrastructure have to be cut

If X tax revenue needs to be raised, and Y pays less, then Z must pay more. And having one of the richest companies in the world pay 2.4% when most of us are paying an order of magnitude more lacks justice.

This is true for any plausible value of X, so simply saying "there shouldn't be as much tax" is irrelevant.

Most people pay no taxes at all. The diminishing middle class is increasingly being held to pay the bulk of taxes. Rich can avoid taxes, the poor don't pay any, and the rest is screwed.

This is why INCOME taxes are evil, especially the progressive income tax structure we have now. For corporations, we need to have wealth transfer taxes instead of income taxes. Dividends are taxed, shifting "fees" and "payments" to foreign (offshore) corporations are taxed, payments for imported goods are taxed etc. Anytime money is transferred there is a "tax" upon that transfer (corporatations).

And, if we understand corporations are creations of the state, we'd better understand their role. However they aren't treated as creations of the state, but rather as "non-person entities" which erode the liberties of people, which is a huge problem.

Who's "they"? And, assuming you're referring to google, how are they shafting you?It's not your money.

They're shafting you if you're a much smaller corporation or an individual that can't afford these tax dodges. Then you're bearing a disproportionately large share of the tax burden. And no, getting rid of corporate income taxes doesn't make this better, it makes it worse.

We're being shafted because they aren't shouldering their fare share of the tax burden. Common people don't have any such loopholes. If we try and play a shell game to get out of paying taxes, we get audited and our lives get ruined. They get a cover story about how genius they are and how other companies who make money by selling information about us are going to start doing the same thing.

If they're going to make money selling our personal data to other people who intend to exploit it to try and trick us into buying stuff, the least the can do is cough up the extra $1bn a year or whatever to help pay for infrastructure, social programs and wars. Fuck their money. As soon as it gets labeled taxable income it becomes government money, and that means everyone's money, so they are screwing us over.

"They" are Microsoft, Google, Facebook, etc. Any company that uses this method.

And, assuming you're referring to google, how are they shafting you? It's not your money.

No, it's not my money. It's the communal money that is under so much debate by politicians. And the fact that Google and everyone else has a hundred goddamned lawyers and accountants sitting around saving them billions of dollars does upset me. Because I don't have that. I don't have the option to employ the "double Irish" tactic when trying to save thousands of dollars in taxes each year so I can afford a simple house. Nope, they get that privilege and I don't because I'm poorer than them. So who's being screwed over? Every tax payer that doesn't have or employ those options. If you live in America, that's you. Why is your public education so lacking? Why do your taxes go up? Well, part of it is that companies employ tax evasion methods like the ones listed in the article. I'm not singling out Google, I'm expressing equal anger toward all who employ these methods.

You can call me a socialist, you can call me a communist. That's fine because I know I'm neither of those. I'm just someone that wants a fair playing field when it comes to aggregating X amount of resources so that our government and public services continue to function properly.

The men and women who founded this country cited 'taxation without representation' as one of the reasons. Like them, I'm not okay with lobbyists and tax loopholes that are apparently legal and okay to anyone who has tons and tons and tons of money. The rich get richer and the poor get poorer just because.

Corporate income taxes are a tax on economic inefficiency, monopolies, etc. In a properly competitive market, large rates of profit do not persist, because the invisible hand will reallocate resources to drive prices towards the cost of production (plus an epsilon). If corporations are making large profits, it's by definition because the market they're operating in is failing, and recovering the proceeds of that market failure seems perfectly justified to me..

Technically Google has committed no crime, and their tax avoidance is entirely legal. While it is normal to feel a moral outrage, I think your anger should be focused on those who created the loopholes in the first place. Washington.

Technically Google has committed no crime, and their tax avoidance is entirely legal. While it is normal to feel a moral outrage, I think your anger should be focused on those who created the loopholes in the first place. Washington.

Technically Washington has committed no crime, and their acceptance of massive quantities of cash in exchange for favorable tax legislation is entirely legal. While it is normal to feel a moral outrage, I think your anger should be focused on those who paid for the loopholes in the first place. Google. And Microsoft. And a few hundred other large corporations.

Absolutely agreed. The anger toward tax evasion is entirely misdirected. If you want to point fingers, you can aim them straight at the supreme court, who made the decision that money == speech, and therefore bribary == simply exercising one's rights, and then proceeded to rape the corpse of the American system of democracy in their "Citizens United v Federal Election Commission" ruling.

""Anyone may arrange his affairs so that his taxes shall be as low aspossible; he is not bound to choose that pattern which best pays thetreasury. There is not even a patriotic duty to increase one's taxes.Over and over again the Courts have said that there is nothing sinisterin so arranging affairs as to keep taxes as low as possible. Everyonedoes it, rich and poor alike and all do right, for nobody owes anypublic duty to pay more than the law demands."" - Judge Learned Hand

That philosophy is fine for tax loopholes that were created by popular vote with broad support from the general public. I have a harder time accepting it when these loopholes- which are designed specifically to exempt only corporations, you and I can go pound sand- were drafted and created by expensive corporate lobbyists. You're essentially saying that we should allow Google to bribe our politicians into giving them huge tax breaks, and then gag us with Hand's quote to keep us from complaining about it. To be blunt, fuck that.

The ridiculously complex tax code is to blame. It's time to flush it and start again. That's one of the concepts behind H.R.25 [loc.gov], also known as the FairTax [fairtax.org].

It's a misconception that corporations pay taxes. They don't. They get all their money from their customers (and some from investment). If you raise corporate taxes, the corporation raises prices to cover the tax. Why hide it like this? Just tax the customer, so we can all SEE how much tax we're paying. It's the only way to keep people involved in the battle to lower government spending, which is out of control.

If corporations were not recognized as individuals in a number of other annoying contexts (political contributions, "personal" rights, etc) then I *might* be inclined to agree. But as it stands, they've got the best of both worlds; no meaningful taxation like individuals are burdened with, but all the same protections and "rights" as well.

Unless you believe that all money ultimately belongs to the government, I fail to see how this is evil.

I look for every deduction I can grab as well. So does almost everyone else. This isn't wrong.

I disagree. Legal and moral aren't synonymous. As one of the country's largest technology companies, Google has a moral obligation to pay their fair share of taxes whether they're legally obligated to or not. They also have a moral obligation to lobby against these unfair tax codes. You cannot take a neutral stance on moral issues and avoid being evil. Doing good is the only way to avoid being evil because by taking a neutral stance is usually just as bad as being intentionally evil.

It goes back to the old murder issue: If someone is drowning and you have the ability to save them but don't, have you just murdered the person? My answer is: it doesn't matter because regardless, inaction was evil. Our government is drowning in debt and Google is intentionally contributing to the problem. Their attitude is, "I don't want to get wet, someone else can dive in."

They bought consumer trust with their "don't be evil" slogan, it's about time they started living up to it again.

First, last I checked, governments were awash in revenue. They just have spent even more. You are essentially arguing that the gambling addict has too much debt so we should give him more money. No thanks.

And what exactly is their "fair share"? There is none that can be objectively ascertained.

Btw, did you overpay your taxes? You're allowed to and not take your deduction.